Goldman, UBS Encouraged By Burberry’s Turnaround Momentum After Earnings Print
The global luxury market remains under pressure across all major regions—from Asia to Europe to the U.S.—but one brand may be turning a corner. British trench coat maker Burberry has been undergoing a multi-quarter turnaround, showing early signs of a potential bottoming out. A sustained recovery, however, will depend on consumer sentiment holding up amid ongoing trade disputes and mounting macroeconomic headwinds.
Burberry shares jumped 7% in London after the luxury brand reported better-than-expected first-quarter sales—offering a much-needed sigh of relief for traders and investors who’ve been buying the dip. The rally follows a brutal multi-year bear market, with shares down as much as 78% from their early 2023 peak of £2,656 to a low of £597 by mid-2024.
And the retracement begins.
Q1 FY 2025 was better than expected:
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Comparable Retail Sales: -1% (better than -3.67% expected)
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Retail Sales: £433M, down 5.5% YoY (slightly above £431.3M estimate)
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Retail Revenue at Constant Exchange Rates (CER): -2% (better than -3.44% expected)
„The improvement in our first quarter comparable sales, strength in our core categories, and uptick in brand desirability gives us conviction in the path ahead,” CEO Joshua Schulman wrote in a statement.
CFO Kate Ferry pointed out, „Traffic in the luxury market is challenging everywhere.” However, she noted that Burberry’s performance in China improved.
Commenting on Q1 FY 2025, UBS analyst Zuzanna Pusz told clients the results „confirmed the solid progress of its turnaround delivering a meaningful sequential improvement in its LFL growth against a tough industry.”
Pusz continued:
All in all, we are really encouraged by this print, which gives us more confidence that BRBY’s brand momentum is accelerating. However, potential negative market reaction today (despite likely no changes to consensus at this stage, unless management comments on the call at 9am UKT today indicate otherwise) due to very positive positioning into the print and the somewhat higher buy-side expectations (as per our conversations with investors many were hoping for flat to slightly positive LFL) is on our mind.
In a separate note, Goldman analyst Louise Singlehurst noted, „Whilst the external environment remains challenging and the company is in the early stages of the turnaround, the Autumn 2025 collection is being well received, the cost saving plan is on track (£80m savings by FY26) and that margin improvement is expected this year.”
The broader Goldman Sachs EU Luxury Goods Index (GSXELUXG) shows that the performance of European luxury stocks has largely been stagnant over the last 3.5 years.
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Tyler Durden
Fri, 07/18/2025 – 09:30
